Dear Buyers, Socializing With Sellers will Make Your life Easier

Most buyers wrongfully believe that relationships don’t count in business purchase and sale transactions. They think that getting the best possible price and terms is the most important. I personally experienced instances when misunderstandings and lack of communication were responsible for long delays and additional costs to transactions or even the cause of promising deals falling through. In other instances, deals that seemed impossible still happened because sellers and buyers cooperated fully simply because they liked each other!

Most experienced deal makers understand that numbers, while very important, don’t make deals happen but people do. Establishing a relationship with the seller is paramount for a buyer. There are two main reasons why relationships are deal drivers:

  1. We trust people we know and like. The deal making process involves a lot of uncertainty both for buyers and sellers. Uncertainty means perception of risk. If this perception is beyond the risk tolerance threshold then no deal can be made. Human interaction and socializing reduces this perception of risk.
  2. Most people make decisions emotionally and then rationalize them. This is the nature of human beings. Even famous CEO’s of large multinational companies operate the same way. If the seller likes you personally, he/she will find reasons to sell you the business for reasonable price and terms. On the other side, if the seller doesn’t like you, he might change his mind about the whole idea of selling the company just to justify not selling to you.

I frequently come across buyers who justify their lack of social skills by believing and acting as if business results only depended on rational behavior where economic benefits are the only considerations. Time has proven again and again that this is an old theory with a lot of limitations. Business people do act emotionally and managing emotions will always be a success factor in business.

Published by

Omar Kettani

I am a business broker in Toronto. I am specialized in selling businesses with less than $10 million in value. I have a master of Engineering from a top-notch French Engineering school and an MBA from the prestigious Richard Ivey Business school in the University of Western Ontario where I specialized in entrepreneurial finance. I have a long experience in banking, business ownership, marketing and finance. I dedicate my career to helping small and middle size business owners sell their businesses to the right buyers.

7 thoughts on “Dear Buyers, Socializing With Sellers will Make Your life Easier”

  1. Entrepreneurs do business with people they know and trust, no matter what type of transaction it is. Far to often many people try to get something without taking the time to create a relationship with the prospects.

    I like to think of it as Social Currency.
    Without depositing money into a bank account, you can’t go to the bank and withdraw money later. Social Currency works in the same way. Without making deposits with prospects you will never have anything there to withdraw from when needed.

    Great post. Thanks for sharing.

  2. Yes I agree with that now a days Business people do act emotionally and managing emotions will always be a success factor in business.

  3. For small businesses the relationship between the buyer and seller is very important. How bigger the company is, the less important this relationship will be. In big strategic acquisitions aspects like technology or market share (or others) will the main drivers to do the transaction.

  4. For small businesses the relationship between buyer and seller are very important. As the target gets bigger other aspects like market share, technology, or others will get more important. Allthough a better relationship in an acquisition can be beneficial for the price.

  5. In any business buyers and sellers are like two faces of a coin. Both are incomplete without each other. A healthy relation between buyer and seller is the sign of maturity among the business doing parties

  6. Having strong communications I believe to be very crucial and important in all aspects. You then better understand the needs, wants and not just numbers. Both sides will have a clearer understanding of each-other thus a great relationship!

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